EMAIL FRIEND Setting the Record Straight Reverse Mortgage Misconceptions You May Have Read or Heard MISCONCEPTION #17 - REVERSE MORTGAGES ARE NOT SAFE To start with, a HECM Reverse Mortgage is safer for the senior consumer than a regular mortgage! That’s because you cannot be foreclosed for not making a payment, because NO payments are required! Many people react to the suggestion of a Reverse Mortgage by assuming that lenders will take their homes. The fact is that the home MUST be in and REMAIN in the name of the borrowers only. Since the Reverse Mortgage is a mortgage, a lien is placed on the property like any other mortgage. This assures that the lender eventually will be repaid but for only the amount owed which is principle, interest, and costs just like any other type of mortgage. Since there are no payments to make, you cannot fall behind in your payments. If you choose the monthly payout/tenure option FHA insurance guarantees that the monthly income is for life. Consumer protections include counseling by AARP or an FHA approved counseling agency. The FHA also limits the fees that can be charged. More than ninety-five (95) percent of Reverse Mortgages closed are the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) version. This guarantees the full protection of the United States Government through use of the required two (2) percent insurance fee paid on all FHA Reverse mortgages. The remaining less than five (5) percent of Reverse Mortgages are the Federal National Mortgage Association (FannieMae) and Proprietary Reverse Mortgages, which are guaranteed by private lenders that insure their safety. Related Links: The lender or bank will take my home We will have nothing to leave our children? When the loan becomes due, the lender will sell my home. There are strict credit and income requirements You cannot have an existing mortgage on your home When the loan comes due you may owe more than the home is worth My Social Security and Medicare benefits will be affected There are restrictions on how the money is used We will have to make monthly payments We will have to pay taxes on the funds received The lender may require immediate repayment A reverse mortgage is similar to a home equity loan Reverse mortgages are predatory It's difficult to qualify for a reverse mortgage Reverse mortgages are prohibitively expensive A reverse mortgage is only for those in desperate need and/or as a last resort Other misrepresentations you may have heard For more information [ PRIVACY POLICY ]     [ TERMS OF USE ]